Foster Incorporated is trying to decide whether to lease or purchase a piece of equipment needed for the next $10$ years. The equipment would cost $$45,000$ to purchase, and maintenance costs would be $$5,400$ per year. After $10$ years, Foster estimates it could sell the equipment for $$26,000.$ If Foster leases the equipment, it would pay $$16,000$ each year, which would include all maintenance costs. If Foster's cost of capital is $11\%,$ Foster should: $($Future Value of $$1,$ Present Value of $$1,$ Future Value Annuity of $$1,$ Present Value Annuity of $$1)$

Note: Use the appropriate factors from the PV tables.

Multiple Choice

$$ buy the equipment, as the net present value of the cost is about $$45,000$ less.

$$ lease the equipment, as the net present value of the cost is about $$26,600$ less.

$$ buy the equipment, as the net present value of the cost is about $$26,600$ less.

$$ lease the equipment, as the net present value of the cost is about $$22,900$ less.